Markets opened the week on a positive note looking closely at inflation and growth. In Europe inflation remains high in Norway and the Czech Republic, while in industrial Production in both Belgium and Italy remain severely depressed. European markets will look ahead to the ECB’s interest rate decision, on Thursday, and see how they process the inflation v growth scenario. They are expected to leave rates unchanged, ostensibly to allow previous rises to flow through the economy. All eyes will be on US inflation data, set to be released Wednesday, which is expected to cool. If it does not, then there will be serious questions leading into next week’s Fed rate decision. The US Dollar eased, despite bond yields remaining bid, allowing some relief for the currencies. The GBP bounced back above 1.2500, while the EUR pushed back to 1.0740, ahead of the key ECB meeting.
The softer reserve allowed the commodity currencies to stablise, with the AUD breaking back above 0.6400, while the NZD looked to regain 0.5900. All eyes remain firmly on inflation and growth data.